Godrej Consumer Products falls post Q1 results; Morgan Stanley still overweight

Godrej Consumer Products' consolidated net profit fell 8 percent to Rs 318 crore year-on-year in Q1FY24

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Shares of Godrej Consumer Products fell over 2 percent to Rs 1,008 during early trade on August 8 after the company reported a 7.6 percent decline in net profit on year for the April-June quarter of FY24.

Brokerage firm Motilal Oswal has given ‘buy’ rating on the stock with a target price of Rs 2,100. The domestic brokerage firm said that revenue and operating profit were in line with their estimates, however net profit was a miss. Net profit missed estimates due to a stamp duty payment of Rs 77 crore for acquisition of Raymond’s consumer care business, it said.

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Further, Morgan Stanley has an ‘overweight’ rating on the stock with a target price of Rs 1,072. The foreign brokerage firm said that Q1FY24 results missed estimates, however, results were way ahead of the company’s performance. “Improving trend in growth, margin and capacity investments are positives for the company," it said.

Also read: Godrej Consumer Products Q1 Result: Net profit falls 7.6% to Rs 318.8 crore, revenue rises 10.3 %, misses estimates

Godrej Consumer Products aims volume and not pricing growth in future. And in order to drive volumes, it is adding capacity by investing Rs 900 crore over the next 18-36 months in capex, said the company during the Q1FY24 earnings conference call.

Nomura Institutional Equities also has a ‘buy’ rating on the stock with a target price of Rs 1,225 per share. The brokerage firm said that Q1FY24 results were in line with their estimates and Godrej Consumer Products performance was better than its peers. “Devaluation of Niara (Nigerian currency) will impact overall sales growth by 200 basis points,” the brokerage said in a note.

Meanwhile, CLSA has an ‘underperform’ rating on the stock with a target price of Rs 1,040. “International business grew by 15 percent in constant currency terms, however, significant devaluation (Niara) will have a negative impact in coming quarters,” it said in a note.

In May, the exchange rate for Niara was 450 Niara/$. In later part of the June, it increased to Rs 750 Niara/$, said the company in its Q1FY24 earnings conference call. The difference in exchange rate was shown as a forex loss in the quarter.

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